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Telecom and bank shares might seem unlikely havens amid the current crisis in Europe, but both could be good places to hide while awaiting the verdict on Greece's status in the euro zone. Telecom stocks have been unloved for ages, partly owing to mature markets and tight regulation, while bank shares soared in the first couple of months of 2012, only to crash back to earth again.

The Stoxx Europe 600 closed Friday at 242.49 points, up 1.5% on the week, after making a low for the year on May 18. But the telecom sector is down 5.8% since Jan. 1, and the banks sub-sector is off 4%. Only shares of oil and gas and basic-resources companies have fared worse.

Telecoms and banks aren't for everyone. Telecom companies could face still more regulation, and banks are difficult to value. The risks associated with banks came into sharp focus Friday when
Bankiabkia.mc -0.4139072847682119%Bankia S.A.Spain: MadridEUR1.203
-0.005-0.4139072847682119%
/Date(1438382280000-0500)/
Volume (Delayed 15m)
:
20281919
P/E Ratio
18.4818201564107Market Cap
13855345001.8597
Dividend Yield
1.46118038237739% Rev. per Employee
352937More quote details and news »bkia.mcinYour ValueYour ChangeShort position
(ticker: BKIA.Spain), Spain's fourth-largest lender, was approved for an injection of 19 billion euros ($24 billion) from the government. The bank, which has suffered massive loan losses as a result of the bust in Spain's real-estate market, was partially nationalized earlier this year. Bankia was downgraded by Standard & Poor's the same day.

Many professional investors have been sitting on the sidelines, waiting to take their cues from Greece, whose sovereign-debt woes make it increasingly likely the country will leave the euro. Pierre-Yves Gauthier, head of research at AlphaValue in Paris, has met with fund managers in Madrid and London in recent weeks, and detects a change in sentiment for the worse. "They were just panicking," he reports.

Gauthier is looking for contrarian plays because volatile markets mean "smart strategies can't be implemented." So he favors what he calls "trashed stocks" that have been oversold and now look cheap. "As a defensive instrument, dividends in telecoms are a sure thing," says Gauthier. "Banks are a screaming Buy, whatever way you look at it."

EUROPEAN POLITICIANS FAILED at a summit last week to come up with a plan to end the region's crisis. They will meet again in late June, after Greece's June 17 election re-run, the results of which could help determine whether the country sticks with or abandons the euro.

Germany has been reluctant to make concessions to its euro-zone partners because it wants less-disciplined nations to whip their economies into shape themselves rather than rely on bailouts that won't require them to address their profligate ways. But a political response will require some sort of rebalancing within the euro zone, to Germany's detriment. It likely would include a growth plan and joint funding for euro-zone members. There is mounting support for common Eurobonds, which would trigger a convergence of bond yields across the euro zone. That would bring down borrowing costs for countries such as Italy and Spain, whose 10-year bonds yield more than 5% and 6%, respectively, but increase costs for Germany, which pays less than 2% on debt of the same maturity. Convergence would be around 4%, analysts reckon.

Another possibility is giving a banking licence to the European Stability Mechanism, enabling it raise its own funds that could be invested in euro-zone government debt. The effect would be a similar convergence of yields, and Germany would be out of pocket.